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What type of trust is right for your needs?

On Behalf of | Aug 7, 2023 | Trusts |

A trust is a legal document that puts assets in the protection of a trustee. The trustee is then responsible for seeing that the assets are distributed to beneficiaries as instructed by the grantor in their estate plan

Unlike a will, there are many kinds of trusts. Here’s what you should know:

5 kinds of trusts to consider 

It can be difficult to decide what kind of trust you should draft. Here are a few trusts you may consider making:

  • Revocable trust: The grantor may wish to make a revocable trust that can be altered or revoked by the grantor. For example, the grantor could add or remove beneficiaries or assets to a revocable trust. A revocable trust can help protect assets from estate taxes, disputes or probate.
  • Irrevocable trust: Sometimes grantors make trusts that can’t be changed or revoked by the grantor without the consent of the beneficiaries. Once the grantor passes away, a revocable trust becomes irrevocable.
  • Generation-skipping trust: Many grantors put aside assets for family members. A generation-skipping trust can be used to bypass a generation and give assets to, for example, grandchildren. This kind of trust can have stipulations that allow the grantor to control how assets are used, such as higher education.
  • Pet trust: Many pass away and leave behind pets. Grantors may wish to put aside assets in a pet trust to help support the care and protection of their pets. Assets in this trust are often only used for food, medical and shelter expenses.
  • Special needs trust: A grantor may wish to put assets away for someone who receives disability benefits. However, an inheritance may create difficulties for the family member with disabilities. A special needs trust could be made to help limit how many assets are given to this beneficiary so they continue to gain the disability benefits they need.

When drafting a trust, you may want to be sure you understand your legal options. There may be a trust that better benefits your heirs than what you initially have in mind.